In yesterday’s post, I showed that missing middle housing, as celebrated in Daniel Parolek’s new book, may be stuck in the middle, too balanced to compete with single family housing on the one hand and multifamily on the other.
But what about all the disadvantages that middle housing faces? Aren’t those cost disadvantages just the result of unfair regulations and financing?
Indeed, structures of three or more units are subject to a stricter fire code. It’s costly to set up a condo or homeowners’ association. Small-scale infill builders don’t have economies of scale.
Those, and the other barriers to middle housing that Parolek lays out in Chapter 4, seem inherent or reasonable rather than unfair.
In particular, most middle housing types cannot, if all units are owner-occupied, use a brilliant legal tradition known as “fee simple” ownership. Fee simple is the most common form of ownership in the Anglosphere and it facilitates clarity in transactions, chain of title, and maintenance.
Urbanists should especially favor fee simple ownership of most city parcels because it facilitates redevelopment. Consider a six-plex condominium nearing the end of its useful life: to demolish and redevelop the site requires bringing six owners to agreement on the terms and timing of redevelopment. A single-owner building can be bought in a single arms-length transaction.
It’s no coincidence that the type of middle housing with the greatest success in recent years – townhomes – can be occupied by fee-simple owners, combining the advantages of owner-occupancy with the advantages of the fee simple legal tradition.
Many middle housing forms enjoy their own structural advantage: one unit is frequently the home of the (fee simple) owner. By occupying one unit, a purchaser can also access much lower interest rates than a non-resident landlord. (This is thanks to FHA insurance, as Parolek notes on p. 86). Having the owner onsite helps solve some of the common problems that arise in landlord-tenant relationships, and it’s a classic path to financial independence.
As the Dropkick Murphys spat in Flannigan’s Ball:
Then he hit a big one and felt like a man again
Bought a three-decker with two floors to rent